“Pay TV was ready for SVOD”: PricewaterhouseCoopers

“Pay TV was ready for SVOD”: PricewaterhouseCoopers
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Rather than casting its own predictions on the future of TV, B&T decided to get an expert to do the crystal-balling. Enter Megan Brownlow (pictured below), executive director at PricewaterhouseCoopers.

Megan Brownlow

Will pay TV have to change its subscription model from the threat of subscription video on demand (SVOD)?

Subscription television is already changing its business model, and in fact saw SVOD coming towards it from international players like Netflix quite early, and had gone into that market as a test prior to Netflix coming to Australia. Subscription TV was ready, and the other thing it did before Netflix arrived was drop its entry price because subscription television in Australia was the most profitable in the world – we had the highest average revenue per user at about $100 a month, and so just before Netflix arrived, there was a big announcement that Foxtel would drop its entry from $50 to $25. That’s had a slight impact on average revenue per user, but it’s essentially made pay TV more accessible.

How will Aussies view TV in the future, and how will advertisers adapt?

Nothing dramatically different from what we’ve seen over the last few years, which is multi-screening. This is good for advertisers, because it gives them a metric to measure the effectiveness of their broadcast ads, like a URL with a call to action.

Australians have never seemed to be very willing to pay for content. Do you see that changing?

The fact that people are generally not willing to pay for content is a problem. Historically, Australians have been by head of population the biggest pirates in the world, and that has led to the view that Australians are very reluctant to pay for content.

There is a view developing now, given the quick uptake of SVOD services, that if you pitch it at the right entry price – cheap – that Australians will pay, and in fact might pay for more than one, because it looks like we’ll end up stacking our SVOD services.

You obviously see a lot of future trends in TV. What are the threats and opportunities?

The businesses that are only advertising-supported are probably the most vulnerable to the changes in consumer behaviour and shifts in advertising revenue, so we are seeing and ongoing shift away from traditional media to digital media for advertising, and that’s something that’s been with us for 15 years. This is very scary for businesses that only have advertising [as a revenue stream], but in response, what we’re seeing is the diversification of business models.

For example, Foxtel went into Triple Play, so they’re now selling broadband services. Free-to-air television is beefing up their ability to sell formats, so you’ve got some really successful television formats that are providing additional revenue. Then you’ve got interesting areas like live events – TV shows turned into events that consumers will pay directly for – and we’re seeing that people will pay for live events.

We often hear that the 30-second TVC is dead. How true is that?

It’s certainly under considerable threat, and the reasons are that we now have technology that skips ads, and we are watching less live content where ads can’t be avoided. What are the responses to that? Content advertising, integrated advertising. None of these things are really new, but we are getting smarter at building the ads into the content.

Content marketing is creating campaigns that work across multiple platforms at the same time, which again isn’t particularly new, but what we’re recognising is there’s no such thing as a TV campaign on its own anymore – it has to be combined with either outdoor, which you can’t switch off, or digital, which you can measure, or some other form of marketing.

Free-to-air TV is struggling for eyeballs. How do you see Seven, Nine and Ten adapting?

They’re fighting on all fronts, but there is a good expression, which is “when business is doing well, business does business, and when business is not doing well, business does government”, so they’re certainly stepping up their lobbying and seeking cuts to licence fees. They’re seeking media reform, which is a reasonable request, but what it means is they’ll look at reducing costs internally and to the government.

They’ll also market more strongly together and seeing themselves as frenemies – they’ll still compete for the television ad dollar, but have a combined enemy, which is external digital. Think TV is a prime example of this.

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